Vodacom, the corporate bully
Various courts have ruled in favour of the inventor of Please Call Me and Vodacom has been ordered to compensate him for his idea, but Nkosana Makate has yet to see a single cent.
nearlya year after the Constitutional Court ordered Vodacom to compensate Nkosana Makate, the inventor of the Please Call Me SMS service which allows a user to send a free message requesting a callback from the recipient, the telecommunications giant is yet to cough up.
Instead, the Vodacom Please Call Me legal challenge was back in the Constitutional Court in February, after negotiations around compensation between the parties came to a grinding halt in September 2016. Following a costly eight-year legal battle, the court ruled in favour of Makate in April 2016, ordering the parties to negotiate “reasonable compensation” in good faith.
The April judgment was seen as a massive David vs Goliath victory for Makate, who had been locked in battle with Vodacom over Please Call Me for 15 years. After all, both the South Gauteng High Court and the Constitutional Court found that former Vodacom CEO Alan Knott-Craig had created a “false narrative” about the origin of the idea. Knott-Craig claimed that he developed the Please Call Me service after observing two security guards trying to communicate in Vodacom’s executive office block by sending missed calls to each other.
“This untrue story appears to have been part of a stratagem to deny the applicant compensation for the idea,” reads the Constitutional Court judgment from April 2016.
In 2014, the South Gauteng High Court found that Knott-Craig was not “frank and honest” about his knowledge of Makate and his idea and its link to the Please Call Me service.
Makate took the Please Call Me concept to his employer in November 2000. At the time, Vodacom’s head of product development, Philip Geissler, reached an oral agreement with Makate that Vodacom would try to implement the idea.
“If it proved commercially viable, Mr Makate would be paid a share of proceeds from the product subject to terms to be negotiated between him and Mr Geissler,” last year’s Constitutional Court judgment reads.
Vodacom implemented the idea in March 2001, but Makate was never compensated. The Constitutional Court said that “it is common cause that this product has generated revenue amounting to billions of rands”.
However, Vodacom is still disputing the amount of revenue that Please Call Me generated. Makate maintains that he wants 15% of this revenue and has dismissed Vodacom’s assertion that it faces difficulties in determining the revenue since its inception.
Makate had requested Vodacom to give his own appointed experts access to its records but Vodacom maintains that Please Call Me “was never treated in its income statement as a revenuegenerating product”.
A former Vodacom employee who worked on the financial side, Andrew Hendricks, has disputed Vodacom’s claim that it can’t easily calculate the revenue amount.
In an affidavit supporting Makate’s recent court papers, Hendricks claims that Vodacom does have the ability to calculate the total revenue from Please Call Me. “In addition, they know exactly how much advertising revenue is generated off the tagged-on advertisement to the ‘Please Call Me’ messages.”
Vodacom insisted that it is engaging in good faith and has made a number of attempts to resolve the deadlock.
However, Vodacom is adamant that Makate’s demands for a share of the Please Call Me revenue will not fly and it is open to other methodologies to arrive at a reasonable compensation. It also argued that Makate’s interpretation of the Constitutional Court order is incorrect, as it doesn’t suggest that the company is obliged to pay him a share of revenue.
In February, the Constitutional Court dismissed Makate’s application in which he sought clarification on the court’s order for “reasonable compensation”, leaving the parties with no choice but to get back to the negotiating table.
While Vodacom continues to play hardball with Makate, it risks showing South African consumers exactly what kind of corporate bully it can be. It has shown it is prepared to go to abnormal lengths to rebuff what has been found to be a legitimate claim from its own former employee.
Vodacom’s strong-arm tactics may result in a lower settlement amount than Makate demands, but every month this case drags on unresolved, more and more reputational damage is being done to the telecoms company’s corporate image.
Nkosana Makate Inventor of the Please Call Me service
Alan Knott-Craig Former CEO of Vodacom